EXHIBIT 2.4
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
A.P.S., INC.
AS SELLER
AND
BWP DISTRIBUTORS, INC.
AS PURCHASER
DATED AS OF SEPTEMBER 9, 1998
TABLE OF CONTENTS
PAGE NO.
ARTICLE I. DEFINITIONS.....................................................2
Section 1.1. Definitions.................................................2
Section 1.2. Accounting Terms and Determinations........................10
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS AND ASSUMPTION OF
ASSUMED LIABILITIES.........................................11
Section 2.1. Purchase and Sale of Purchased Assets......................11
Section 2.2. Assumption of Obligations and Liabilities..................11
Section 2.3. [RESERVED].................................................12
Section 2.4. Purchase Price; Payment of Purchase Price..................12
Section 2.5. Physical Inventory; Inventory True-Up.......................13
Section 2.6. Accounts Receivable True-Up................................14
Section 2.7. Condition of Purchased Assets; Return of Inventory;
Inventory in Transit; Payment for Dirty Core and
Warranty Inventory...................................14
Section 2.8. Allocation of Purchase Price...............................15
Section 2.9. Sale at Closing Date.......................................15
Section 2.10. Apportionments............................................16
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER......................18
Section 3.1. Authority of Seller........................................18
Section 3.2. No Conflict or Violation...................................18
Section 3.3. Consents and Approvals.....................................18
Section 3.4. Compliance with Law........................................19
Section 3.5. Permits....................................................19
Section 3.6. Ownership of Purchased Assets..............................19
Section 3.7. Assigned Contracts.........................................19
Section 3.8. Labor Relations............................................19
Section 3.9. Litigation.................................................19
Section 3.10. Brokers....................................................19
Section 3.11. Disclaimer of Additional Representations and
Warranties; Schedules................................20
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................20
Section 4.1. Authority of Purchaser.....................................20
Section 4.2. No Conflict or Violation...................................21
Section 4.3. Consents and Approvals.....................................21
Section 4.4. Availability of Funds......................................21
Section 4.5. Litigation.................................................21
Section 4.6. Brokers....................................................21
Section 4.7. Adequate Assurances Regarding Executory Contracts..........22
ARTICLE V. CERTAIN COVENANTS OF SELLER.....................................22
Section 5.1. Conduct of Business Before the Closing Date................22
Section 5.2. Consents and Approvals.....................................22
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Section 5.3. Information and Access.....................................22
Section 5.4. Further Assurances.........................................23
Section 5.5. Assignment of Contracts....................................23
Section 5.6. Services to be provided by Seller..........................23
Section 5.7. Cure of Defaults...........................................23
Section 5.8. Bankruptcy Actions.........................................23
Section 5.9. Closed Locations' Transfer of Inventory From Closed
Locations............................................23
Section 5.10. Vacation and Sick Leave...................................24
Section 5.11. Form of Lease and Sublease; Services Agreement............24
ARTICLE VI. CERTAIN COVENANTS OF PURCHASER.................................24
Section 6.1. Consents and Approvals.....................................24
Section 6.2. Adequate Assurances Regarding Executory Contracts..........24
Section 6.3. Performance under Assigned Contracts.......................24
Section 6.4. Further Assurances.........................................25
Section 6.5. Purchaser Financing........................................25
Section 6.6. Collection of Accounts Receivable..........................25
Section 6.7. [RESERVED].................................................25
Section 6.8. Form of Lease and Sublease; Services Agreement.............25
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS............................25
Section 7.1. Representations and Warranties.............................26
Section 7.2. Compliance with Agreement..................................26
Section 7.3. Consents...................................................26
Section 7.4. Purchaser's Closing Deliveries and Obligations.............26
Section 7.5. Closing under Other Asset Purchase Agreement...............26
Section 7.6. Closings under Real Property Purchase Agreements...........26
Section 7.7. Entry of the Order.........................................26
ARTICLE VIII. CONDITIONS TO PURCHASER'S OBLIGATIONS........................26
Section 8.1. Representations and Warranties.............................27
Section 8.2. Compliance with Agreement..................................27
Section 8.3. Consents...................................................27
Section 8.4. Seller's Closing Deliveries and Obligations................27
Section 8.5. Closings under Real Property Purchase Agreements...........27
Section 8.6. Entry of the Order.........................................27
Section 8.7. Assignment of Contracts....................................27
Section 8.8. Termination of Other Asset Purchase Agreement..............27
ARTICLE IX. THE CLOSING; OTHER BIDS; TERMINATION...........................28
Section 9.1. The Closing................................................28
Section 9.2. Other Bids; Fees...........................................29
Section 9.3. Termination................................................31
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Section 9.4. Effects of Termination.....................................32
ARTICLE X. TAXES...........................................................33
Section 10.1. Taxes Related to Purchase of Assets.......................33
Section 10.2. Proration of Real and Personal Property Taxes.............34
Section 10.3. Cooperation...............................................34
ARTICLE XI. EMPLOYEES AND EMPLOYEE BENEFIT PLANS...........................34
Section 11.1. Employment................................................34
Section 11.2. Employee Welfare Benefit Plans............................35
Section 11.3. COBRA.....................................................36
Section 11.4. 401(k) Savings Plan.......................................36
ARTICLE XII. MISCELLANEOUS PROVISIONS......................................36
Section 12.1. Representations and Warranties............................36
Section 12.2. Notices...................................................36
Section 12.3. Amendments................................................37
Section 12.4. Assignment................................................37
Section 12.5. Announcements.............................................38
Section 12.6. Expenses..................................................38
Section 12.7. Entire Agreement..........................................38
Section 12.8. Descriptive Headings......................................38
Section 12.9. Counterparts..............................................38
Section 12.10. Governing Law; Jurisdiction...............................38
Section 12.11. Construction..............................................39
Section 12.12. Severability..............................................39
Section 12.13. Confidentiality...........................................39
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SCHEDULE
LETTER/NUMBER SCHEDULE NAME
Schedule A Certain Affiliates
Schedule B Assigned Leases
Schedule C [RESERVED]
Schedule D Fixed Assets
Schedule E Lease Terms
Schedule F Notes Receivable
Schedule G Other Contracts
Schedule H Purchased Locations
Schedule I Purchased Real Properties
Schedule J Sublease Terms
Schedule K Big-A Stores
2.5(a) Inventory Procedures
3.3 Consents and Approvals
3.4 Compliance with Laws
3.5 Permits
3.7 Assigned Contracts
3.8 Collective Bargaining Agreements
3.9 Litigation
5.9 Closed Locations
EXHIBIT EXHIBIT NAME
A Assignment and Assumption Agreement
B Xxxx of Sale and Assumption Agreement
C Lease Assignment and Assumption Agreement
D License Agreement
E Order
F Services Agreement
G Bidding Protections Order
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of September 9, 1998 by and among A.P.S., INC., a Delaware corporation
("APS") and a debtor and debtor-in-possession in a case pending under chapter 11
of the Bankruptcy Code, certain Affiliates of APS set forth on SCHEDULE A hereto
(together with APS, "SELLER"), which Affiliates are debtors and
debtors-in-possession in cases pending under chapter 11 of the Bankruptcy Code,
and BWP DISTRIBUTORS, INC., a New York corporation ("PURCHASER").
RECITALS
WHEREAS, Seller is engaged in the business of selling and
distributing automotive replacement parts, accessories and supplies and conducts
its business through a network of company-owned stores ("STORES"), installers
service warehouses ("ISWS") and distribution centers ("DCS");
WHEREAS, on February 2, 1998, Seller filed voluntary petitions with
the Bankruptcy Court initiating cases under chapter 11 of the Bankruptcy Code
and has continued in the possession of its assets and in the management of its
business pursuant to sections 1107 and 1008 of the Bankruptcy Code;
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, certain of the assets associated with the Seller's
operations at the Malvern, Pennsylvania DC (the "MALVERN DC") and at certain
associated Stores and ISWs, subject to certain liabilities, all on the terms and
subject to the conditions set forth herein;
WHEREAS, as a condition to its contemplated purchase of assets,
Purchaser will require that Seller close certain Stores and ISWs and that
certain assets located at such Stores and ISWs be transferred to the Malvern DC
concurrently with or as soon as practicable after the closing of the
transactions provided for in this Agreement;
WHEREAS, in connection with its contemplated purchase of assets,
Purchaser desires (i) to conduct business at the Malvern DC and certain
associated Stores and ISWs and retain certain employees of Seller, (ii) to
obtain, for a limited time after the Closing Date, access to Seller's Parts
Information Management System and certain other related services from Seller,
and (iii) to have Seller assign or sublease certain real property lease
agreements and sell certain real property to Purchaser and certain Affiliates of
Purchaser, all on the terms and subject to the conditions set forth herein and
in the Ancillary Agreements.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined herein, the terms
defined in the introductory paragraph and the Recitals to this Agreement shall
have the respective meanings specified therein, and the following terms shall
have the meanings specified below:
"ACCOUNTS RECEIVABLE" means the accounts receivable (including all
rights to xxxx customers for products shipped or services rendered prior
to the Closing Date but excluding the Notes Receivable) which are
allocable to Seller's business operations conducted at the Purchased
Locations (but not the Closed Locations), excluding those accounts
receivable (i) which are more than 90 days past due as of the Closing Date
(as shown on the accounts receivable aging statement prepared as of the
end of the fiscal month prior to the Closing Date) or (ii) the obligor on
which is the subject of a pending bankruptcy proceeding. In determining
the amount of any Account Receivable hereunder, the amount of any unearned
advertising fee or other similar charge allocable thereto shall be
excluded.
"AFCO NOTES" means the notes owned by Autoparts Finance Company,
Inc., a subsidiary of Seller, and identified as AFCO Notes on the NOTES
RECEIVABLE SCHEDULE attached hereto.
"AFFILIATE" means "affiliate" as defined in Rule 405 promulgated
under the Securities Act of 1933, as amended.
"AGREEMENT" has the meaning set forth in the introductory paragraph
and shall include all Schedules and Exhibits hereto.
"ANCILLARY AGREEMENTS" means, collectively, the Lease Assignment and
Assumption Agreements, the Assignment and Assumption Agreement, the Xxxx
of Sale and Assumption Agreement, the Services Agreement, the License
Agreement and the Real Property Lease Agreements.
"APPORTIONMENT DATE" has the meaning set forth in SECTION 2.10.
"AR DISCOUNTS" has the meaning set forth in SECTION 2.4(A).
"ASSIGNED CONTRACTS" means the Assigned Leases and the Other
Contracts relating to the Purchased Locations to be assigned by Seller to
Purchaser and set forth on SCHEDULE 3.7.
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"ASSIGNED LEASES" means those leases to be assigned to Purchaser at
Closing, a schedule of which is attached hereto as SCHEDULE B.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement to be executed at Closing for the Other Contracts, in
substantially the form attached hereto as EXHIBIT A.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 2.2.
"BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section
101, ET SEQ.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
District of Delaware, or any other court, having jurisdiction over the
Cases from time to time.
"BID" has the meaning set forth in SECTION 9.2(B).
"BIG A STORES" means the Stores listed on Schedule K attached
hereto.
"XXXX OF SALE AND ASSUMPTION AGREEMENT" means the Xxxx of Sale and
Assumption Agreement to be executed at Closing by Purchaser and Seller in
substantially the form attached hereto as EXHIBIT B.
"BLACKSTONE" has the meaning set forth in SECTION 9.2(B).
"BREAKUP FEE" has the meaning set forth in SECTION 9.2(D).
"BUSINESS DAY" means a day, other than a Saturday or a Sunday, on
which commercial banks are not required or authorized to close in The City
of New York.
"BUSINESS EMPLOYEES" means employees of Seller whose duties relate
primarily to Seller's business operations at the Purchased Locations.
"CASES" means the chapter 11 cases of Seller pending in the
Bankruptcy Court and being jointly administered for procedural purposes
as IN RE APS HOLDING CORPORATION, ET. AL., Case No. 98-197 (PJW).
"CLOSED LOCATIONS" means the Stores and ISWs listed on SCHEDULE 5.9
hereto which are to be closed prior to,
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concurrently with or after the Closing Date in accordance with SECTION
5.9.
"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
"CLOSING DATE PAYMENT" has the meaning set forth in SECTION
2.4(B).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTED FINANCING" means funds available pursuant to a written
commitment letter or other documentation from a commercial bank or other
lending institution, a copy of which letter or other documentation has
been delivered to Seller prior to the date hereof.
"CURRENT INVENTORY AMOUNT" means the aggregate dollar amount of New
Inventory, based upon 100% of the Warehouse Distributor Cost of such New
Inventory, owned by Seller and located at each of the Purchased Locations
and each of the Closed Locations as shown on Seller's August 25, 1998
general ledger.
"DC" has the meaning set forth in the Recitals hereto.
"DIP LENDERS" means the financial institutions from time to time
party to the Revolving Credit, Term Loan and Guarantee Agreement.
"DIRTY CORE AND WARRANTY INVENTORY" means items of used cores and
warranty inventory returned by customers in amounts customarily found in
the applicable Purchased Locations and Closed Locations.
"ESTIMATED ACCOUNTS RECEIVABLE" means the total Accounts Receivable
estimated by Seller to be outstanding on the Business Day prior to the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXECUTORY CONTRACTS" means all Assigned Contracts entered into by
or assigned to Seller before February 2, 1998 and which are executory or
unexpired as of the Closing Date.
"EXPENSE REIMBURSEMENT" has the meaning set forth in SECTION
9.2(D).
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"FIXED ASSETS" means (i) all of the machinery, equipment, furniture,
fixtures, computers and vehicles used in the operation of the business at
the Purchased Locations on the Closing Date and which are owned by
Seller, a list of which Fixed Assets, with the purchase price allocated
by item or groups of items as of the date of this Agreement (the "FIXED
ASSETS SCHEDULE"), is attached hereto as SCHEDULE D, which Fixed Assets
Schedule shall be updated to reflect acquisitions and dispositions which
are acceptable to Purchaser and depreciation as of the Closing Date; (ii)
leasehold improvements as approved by Purchaser and located at certain of
the Purchased Locations as set forth on the Fixed Assets Schedule; and
(iii) to the extent assignable, any rights of Seller to the warranties,
licenses and other similar rights with respect thereto. The inclusion of
items on the Fixed Assets Schedule shall be subject to audit by Purchaser
prior to the Closing Date for in place and normal serviceable condition
by location.
"FIXED ASSET BOOK VALUE" means the book value net of accumulated
depreciation of the Fixed Assets as of the Closing Date as determined in
accordance with the Fixed Assets Schedule, provided that general ledger
codes 1313B, 1326O and 1324I shall be deemed to have a Fixed Asset Book
Value of zero.
"FORM AGREEMENT" has the meaning set forth in SECTION 9.2(B).
"GOVERNMENTAL AGENCY" means (a) any federal, state, county, local or
municipal governmental or administrative agency or political subdivision
thereof, (b) any governmental authority, board, bureau, commission,
department or instrumentality and (c) any court or administrative
tribunal.
"GPI" means General Parts, Inc., a North Carolina corporation.
"IN-TRANSIT INVENTORY" means automotive inventory subject to open
purchase orders (including back orders) of Seller as of the Closing Date.
"INVENTORY" means New Inventory, Rejected Inventory and Dirty
Core and Warranty Inventory.
"INVENTORY REPRESENTATIVES" has the meaning set forth in SECTION
2.5(A).
"IRS" means the Internal Revenue Service of the United States
Department of the Treasury.
"ISW" has the meaning set forth in the Recitals hereto.
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"KNOWLEDGE" as applied to Seller means the actual knowledge of the
President, the Chief Executive Officer or the Chief Financial Officer of
APS, Inc. or of any of the persons specified in the letter of Seller dated
the date hereof and delivered to Purchaser with respect to this definition
and as applied to Purchaser means the actual knowledge of its President,
Chief Executive Officer or Chief Financial Officer.
"LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreements to be executed at Closing for the Assigned Leases,
in substantially the form attached hereto as EXHIBIT C.
"LEASED PROPERTIES" means the premises subject to the Leases.
"LEASES" means the leases for the premises to remain owned by Seller
after Closing and to be leased by Seller to Purchaser, the terms of which
leases are attached hereto as SCHEDULE E.
"LICENSE AGREEMENT" means the License Agreement to be executed by
Purchaser and Seller at Closing, pursuant to which License Agreement
Seller shall grant to Purchaser certain rights to use trademarks and trade
names of Seller for the periods and on the terms set forth therein, such
Agreement to be substantially in the form attached hereto as EXHIBIT D.
"LIEN" means any mortgage, pledge, security interest, charge or
other encumbrance, other than (i) with respect to Purchased Real
Properties, liens provided for in reports obtained as part of the due
diligence procedures set forth in SECTION 2.11; (ii) liens on property
underlying any of the Leases, Assigned Leases or Subleases; (iii) any
imperfection of title with respect to any asset which does not materially
interfere with the present occupancy, use or marketability of such asset
and the continuation of the present occupancy, use or marketability of
such asset; (iv) such covenants, conditions, restrictions, easements,
encroachments or encumbrances that are not created pursuant to mortgages
or other financing or security documents, and any other state of facts,
which do not, individually or in the aggregate, materially interfere with
the present occupancy or use of such asset; and (v) liens for Taxes not
yet delinquent or which are being contested in good faith through
appropriate proceedings.
"MALVERN DC" has the meaning set forth in the Recitals hereto.
"NEW INVENTORY" means items of automotive inventory in good, salable
condition, listed in the manufacturer's
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current price sheet, including core charges associated with such
inventory, if applicable, and subject to manufacturers' obsolescence and
returned goods policies of the kinds normally extended to customers for a
particular product line on an industry-wide basis, owned by Seller and on
hand at the Purchased Locations or the Closed Locations at the Closing
Date. New Inventory shall not include Dirty Core and Warranty Inventory.
New Inventory (excluding In-transit Inventory) determined on the True-Up
Date to be in excess of 105% of amounts as at June 25, 1998 heretofore
disclosed by Seller to Purchaser shall be subject to renegotiation or
return to Seller. Consigned goods owned by Seller shall be included in New
Inventory only after confirmation of the amount and verification of the
consignment in writing by the consignee.
"NON-COVERED ASSETS " has the meaning set forth in SECTION 9.2(C).
"NOTES RECEIVABLE" means receivables of Seller or its Affiliates
under the AFCO Notes and Warehouse Notes being purchased by Purchaser and
identified in the NOTES RECEIVABLE SCHEDULE attached hereto as SCHEDULE F.
"ORDER" means an order of the Bankruptcy Court, in substantially the
form attached hereto as EXHIBIT E, which order, as of the Closing Date,
shall not have been stayed, vacated or otherwise rendered ineffective,
authorizing, among other things, the sale of the Purchased Assets to
Purchaser, the assignment of the Assigned Contracts to, and the assumption
of the Assigned Contracts by, Purchaser, the transactions contemplated by
the Ancillary Agreements and all other transactions and agreements
contemplated hereby.
"OTHER ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement
dated as of the date hereof between Seller and GPI.
"OTHER CONTRACTS" means the contracts which are listed on the OTHER
CONTRACTS SCHEDULE attached hereto as SCHEDULE G.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
"PERSON" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or other
entity.
"PHYSICAL INVENTORY PERIOD" means the time period or periods during
which the physical inventory is taken pursuant to SECTION 2.5(A).
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"PIMS" means the Parts Information Management System, the
information management system used in operating the business carried on at
the Purchased Locations, access to which is to be granted to Purchaser
pursuant to the Services Agreement.
"PIMS INVENTORY VALUE" means the invoice cost to Seller per item of
Inventory as shown on PIMS (subject to verification by Purchaser) as of
the Business Day prior to the Closing Date.
"PURCHASE PRICE" has the meaning set forth in SECTION 2.4(A).
"PURCHASED ASSETS" means all of the Seller's right, title and
interest as of the Closing Date in and to the following:
(a) the Accounts Receivable;
(b) the Assigned Contracts;
(c) the Dirty Core and Warranty Inventory;
(d) the Fixed Assets;
(e) the In-transit Inventory;
(f) the New Inventory;
(g) the Notes Receivable;
(h) the Purchased Real Property;
(i) records relating primarily to the Purchased Assets, and
copies of personnel files for the Purchaser's Employees;
(j) to the extent legally assignable, Permits required to
conduct business at the Purchased Locations as conducted prior to
the Closing Date; and
(k) independent customer lists and other information and data
relating to independent customers of the Purchased Locations.
"PURCHASED LOCATIONS" means the Malvern DC and the ISWs and Stores
listed on SCHEDULE H attached hereto.
"PURCHASED REAL PROPERTIES" means the real properties to be
purchased by Purchaser on the Closing Date (subject to the provisions of
SECTION 2.11), as set forth on SCHEDULE I attached hereto.
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"PURCHASER'S EMPLOYEES" has the meaning set forth in SECTION 11.1.
"QUALIFYING BID" has the meaning set forth in SECTION 9.2(C).
"REAL PROPERTY LEASE AGREEMENTS" means each of the Leases and
Subleases.
"REAL PROPERTY PURCHASE PRICE " means the purchase price for each of
the Purchased Real Properties, as set forth on SCHEDULE I attached hereto.
"REJECTED INVENTORY" means all items of automotive inventory, other
than Dirty Core and Warranty Inventory, not meeting the definition of New
Inventory and owned by Seller and on hand at the Purchased Locations or
the Closed Locations at the Closing Date, PROVIDED, THAT, for purposes of
this definition of Rejected Inventory, sales of Inventory occurring
between the Closing Date and the date that the Inventory is rejected shall
be applied first to Inventory which was on hand at the Closing Date.
"REVOLVING CREDIT, TERM LOAN AND GUARANTEE AGREEMENT" means the
Revolving Credit, Term Loan and Guarantee Agreement, dated as of February
2, 1998, as the same has been and may be amended, among APS Holding
Corporation, Seller, Seller's subsidiaries, the DIP Lenders and The Chase
Manhattan Bank, as agent for the DIP Lenders.
"SCHEDULES" means the various Schedules referred to in this
Agreement delivered separately to Purchaser on or before the date of this
Agreement, except as otherwise specified in this Agreement.
"SELLER SAVINGS PLAN" has the meaning set forth in SECTION 11.4.
"SERVICES AGREEMENT" means the Services Agreement to be entered into
by Purchaser and Seller at Closing, pursuant to which Services Agreement
Seller shall render certain services to Purchaser for a limited time
following the Closing Date, as contemplated by SECTION 5.7 and
substantially in the form attached hereto as EXHIBIT F.
"STORES" has the meaning set forth in the Recitals hereto.
"SUBLEASED PROPERTIES" means the premises subject to the
Subleases.
"SUBLEASES" means those sublease agreements pursuant to which
certain leases are to be sublet by Seller to
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Purchaser, the terms of which subleases are attached hereto as SCHEDULE J.
"SUPERIOR BID" has the meaning set forth in SECTION 9.2(B).
"TAX RETURN" means any report, return, information return, filing,
claim for refund or other information, including any schedules or
attachments thereto, and any amendments to any of the foregoing required
to be supplied to a taxing authority in connection with Taxes.
"TAXES" means all federal, state, local and foreign taxes, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, withholding, Social Security,
unemployment, disability, real property, personal property, registration,
alternative or add-on minimum, estimated or other tax, including any
interest, penalties or additions thereto, whether disputed or not.
"TRANSACTION TAXES" has the meaning set forth in SECTION 10.1.
"TRUE-UP DATE" , means the date which is ninety (90) Business Days
after the Closing Date.
"WAREHOUSE DISTRIBUTOR COST" means PIMS Inventory Value (with
respect to Inventory not located at Big-A Stores) or other applicable
point-of-sale inventory value (with respect to Inventory located at Big-A
Stores), less 4.9%, provided, however, that with respect to Inventory
located at Big-A Stores, Warehouse Distributor Cost shall be further
reduced by 13.2%.
"WAREHOUSE NOTES" means the notes identified as Warehouse Notes on
the NOTES RECEIVABLE SCHEDULE attached hereto.
"WARN" has the meaning set forth in SECTION 11.1.
"WELFARE TYPE PLANS" has the meaning set forth in SECTION 11.2.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATIONS. All references in
this Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally
10
accepted accounting principles, consistent with Seller's historical practices,
applied on a consistent basis.
ARTICLE II.
PURCHASE AND SALE OF
PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and
subject to the conditions set forth in this Agreement, at the Closing Purchaser
shall purchase from Seller, and Seller shall sell, transfer, assign, convey and
deliver to Purchaser at the Purchased Locations, all of Seller's right, title
and interest in and to the Purchased Assets, PROVIDED, HOWEVER, that Seller
shall be entitled to retain copies of all books and records, in whatever form,
included in the Purchased Assets.
Purchaser acknowledges that it shall not acquire any right, title or
interest in any property, asset or right of Seller that is not a Purchased Asset
or other asset acquired by Purchaser hereunder, including rights of Seller to
any vendor discounts, credits, rebates or other amounts, and claims of Seller
against third parties in respect thereof.
SECTION 2.2. ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the terms
and subject to the conditions set forth in this Agreement, from and after the
Closing, Purchaser will assume and pay, perform, discharge and be responsible
for all of the following liabilities of Seller (collectively, the "ASSUMED
LIABILITIES"):
(a) all obligations and liabilities of Seller under the Assigned
Contracts which accrue from and after the Closing Date; and
(b) all obligations and liabilities of Seller relating to the Leased
Properties, the Subleased Properties and the Purchased Real Properties
which accrue from and after the Closing Date.
Purchaser shall not assume or pay, perform, discharge or be responsible for any
of the obligations or liabilities of Seller other than the Assumed Liabilities
or liabilities assumed, incurred or created under the Ancillary Agreements.
Without limiting the generality of the foregoing provisions of this
SECTION 2.2, Purchaser shall not assume or pay, perform, discharge or be
responsible for any of the obligations or liabilities of Seller pursuant to any
contract or agreement that is not an Assigned Contract, including customer
product purchase agreements.
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In addition, Purchaser does not assume and Seller remains
responsible for all obligations and liabilities related to all rebate and
incentive programs established by or for national accounts, manufacturers or
customers and relating to sales by Seller prior to the Closing Date.
SECTION 2.3. [RESERVED].
SECTION 2.4. PURCHASE PRICE; PAYMENT OF PURCHASE PRICE.
(a) On the terms and subject to the conditions set forth in this
Agreement, the purchase price for the Purchased Assets shall be an aggregate
amount equal to the sum of the following:
(i) eighty-five percent (85%) of the Warehouse Distributor
Cost of the New Inventory;
(ii) an amount equal to the value realized by Purchaser for
Dirty Core and Warranty Inventory determined in accordance with
actual receipts or credits received less, for items delayed beyond
Purchaser's normal practice in return to the manufacturer, 20% for
handling;
(iii) fifty percent (50%) of the Fixed Asset Book Value of the
Fixed Assets at the Malvern DC and one hundred percent (100%) of the
Fixed Asset Book Value of the other Fixed Assets;
(iv) one hundred percent (100%) of principal amounts
outstanding under the Notes Receivable, plus interest accrued to
date of purchase, subject to SECTION 2.4(D);
(v) one hundred percent (100%) of the Warehouse Distributor
Cost of the In-transit Inventory, subject to SECTION 2.7(C);
(vi) one hundred percent (100%) of the face amount of the
Accounts Receivable, less "prompt payment" discounts actually earned
and taken ("AR DISCOUNTS"); and
(vii) the aggregate price for the Purchased Real Property, in
accordance with SECTION 2.11.
The aggregate of the amounts determined pursuant to items (i) through (vii)
above is referred to herein as the "PURCHASE PRICE."
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(b) On the Closing Date, Purchaser shall pay to Seller an amount of
the Purchase Price in cash, by wire transfer of immediately available funds
(pursuant to written instructions to be provided by Seller to Purchaser), equal
to the sum of the following (the "CLOSING DATE PAYMENT"):
(i) eighty-five percent (85%) of the Current Inventory
Amount;
(ii) the portions of the Purchase Price provided for in
SECTIONS 2.4(A)(III) and 2.4(A)(IV);
(iii) an amount equal to sixty-five percent (65%) of the
Estimated Accounts Receivable (determined without regard to AR
Discounts); and
(iv) the aggregate price for the Purchased Real Property, as
provided in SECTION 2.11.
The Closing Date Payment shall be adjusted pursuant to SECTIONS 2.5 and 2.6.
Purchaser shall pay the remainder of the Purchase Price pursuant to SECTIONS
2.4(C), 2.4(D), 2.5(B), 2.6(B), 2.7(C), 2.7(D) and 2.11.
(c) For a period of 180 days following the Closing Date, and after
Purchaser has collected Accounts Receivable equal to the amount paid by
Purchaser under SECTION 2.4(B)(III), as adjusted pursuant to SECTION 2.6,
Purchaser shall remit to Seller on the first and fifteenth days of each month
all Accounts Receivable collected by it.
(d) Notwithstanding the foregoing provisions, Purchaser will
purchase Notes Receivable upon conversion of such obligor to Carquest jobber
status. Upon such purchase, Seller will assign to Purchaser all security
agreements and related instruments with respect to each such Note, and Purchaser
will pay to Seller, in cash, the amount then outstanding under such Note,
together with accrued interest to date of purchase.
SECTION 2.5. PHYSICAL INVENTORY; INVENTORY TRUE-UP. Unless otherwise
noted, all references in this SECTION 2.5 to "aggregate dollar amount" mean the
aggregate dollar amount based upon 100% of the Warehouse Distributor Cost.
(a) Employees or representatives of Seller and Purchaser ("INVENTORY
REPRESENTATIVES") will jointly conduct a physical inventory count of, or other
testing procedures for, the Inventory at Purchased Locations and Closed
Locations, or mutually agree that Seller's Inventory at a Purchased Location or
Closed Location is accurate, in accordance with physical inventory procedures
generally used in the industry and pursuant to the timetables and for the
periods set forth on SCHEDULE 2.5(A) attached hereto (the "PHYSICAL INVENTORY
PERIOD"). During the Physical Inventory Period, Seller, with the assistance of
13
Purchaser, shall prepare a list of Inventory at Purchased Locations and Closed
Locations (the "FINAL INVENTORY SCHEDULE"), which Final Inventory Schedule shall
be completed not later than the True-Up Date. The Final Inventory Schedule shall
be prepared in accordance with the criteria set forth on SCHEDULE 2.5(A).
Purchaser and Seller shall perform an audit of Seller's computer system price
file as part of the physical inventory procedures and prior to completion of the
Final Inventory Schedule. Purchaser shall be responsible for the costs
associated with its own employees and representatives. Seller shall be
responsible for all other costs associated with conducting the physical
inventory and preparing the Final Inventory Schedule pursuant to this SECTION
2.5(A).
(b) In the event that the aggregate dollar amount of New Inventory
shown on the Final Inventory Schedule is less than the Current Inventory Amount,
Seller shall refund to Purchaser, on the first Business Day following the
True-Up Date, an amount equal to eighty-five percent (85%) of the difference
between (x) the Current Inventory Amount and (y) the aggregate dollar amount of
New Inventory shown on the Final Inventory Schedule. In the event that the
aggregate amount of New Inventory shown on the Final Inventory Schedule is
greater than the Current Inventory Amount, Purchaser shall pay to Seller, on the
fist Business Day following the True-Up Date, an amount equal to eighty-five
percent (85%) of the Warehouse Distributor Cost of the additional New Inventory.
SECTION 2.6. ACCOUNTS RECEIVABLE TRUE-UP
(a) On the True-Up Date, Seller shall prepare and deliver to
Purchaser a final statement of Accounts Receivable outstanding as of the close
of business on the Closing Date (the "CLOSING DATE ACCOUNTS RECEIVABLE
STATEMENT") showing the outstanding Accounts Receivable as of the Closing Date,
determined after deduction of applicable AR Discounts.
(b) In the event that the Accounts Receivable shown on the Closing
Date Accounts Receivable Statement are greater than the Estimated Accounts
Receivable, Purchaser shall pay to Seller, on the first Business Day following
the True-Up Date, an amount equal to sixty-five percent (65%) of such excess. In
the event that the Estimated Accounts Receivable are greater than the Accounts
Receivable shown on the Closing Date Accounts Receivable Statement, Seller shall
refund to Purchaser, on the first Business Day following the True-Up Date, an
amount equal to sixty-five percent (65%) of such excess. The provisions of this
SECTION 2.6 shall not affect the rights of Seller to receive payments pursuant
to SECTION 2.4(C).
SECTION 2.7. CONDITION OF PURCHASED ASSETS; RETURN OF INVENTORY;
INVENTORY IN TRANSIT; PAYMENT FOR DIRTY CORE AND WARRANTY INVENTORY.
14
(a) Except for the warranty of title set forth in SECTION 3.6, the
Purchased Assets are being sold "AS IS," "WHERE IS" and "WITH ALL FAULTS" and
Seller hereby expressly disclaims any and all other warranties both express and
implied.
(b) Rejected Inventory shall be returned to the reclamation centers
or other facilities as shall be specified by Seller, at the sole expense of
Seller, with shipment of such Rejected Inventory to take place by five (5)
Business Days after the True-Up Date. Purchaser shall be liable for any loss of
or damage to Rejected Inventory prior to its delivery to such appropriate
Reclamation Center or other facilities.
(c) Purchaser shall allow employees or representatives designated by
Seller to be present at each Purchased Location during normal business hours for
a period of twenty (20) Business Days following the Closing Date for the purpose
of determining items of In-transit Inventory which arrive at the Business
Location during that period. At least five (5) Business Days prior to the
Closing Date, Seller shall present Purchaser with an itemized list of an
estimate of In-transit Inventory. Purchaser shall pay Seller, by wire transfer
within twenty (20) Business Days after receipt of any In-transit Inventory as
noted on the manufacturer's invoice, one hundred percent (100%) of Seller's
Warehouse Distributor Cost for each item of In-transit Inventory.
(d) Purchaser shall remit to Seller on the first and fifteenth days
of each month the value of cash or credits actually received, less any handling
charge, in respect of Dirty Core and Warranty Inventory, as provided in SECTION
2.4(A)(II).
(e) Purchaser shall permit employees and representatives of Seller
to inspect and audit Purchaser's books and records in order to confirm
Purchaser's compliance with SECTIONS 2.7(C) and 2.7(D).
SECTION 2.8. ALLOCATION OF PURCHASE PRICE. To the extent required by
law after the Closing Date, Purchaser and Seller shall prepare and file those
statements or forms (including Form 8594) required by Section 1060 of the Code
and the Treasury regulations thereunder and shall file such statements or forms
with their respective federal income Tax Returns. The parties shall prepare such
statements or forms consistently with any agreed allocation of all or a portion
of the Purchase Price to the Purchased Assets. Each party shall provide the
other party with a copy of such statements or forms as filed. Such allocation of
the Purchase Price will not be binding in the Cases upon the Seller's creditors
or other parties in interest and will not have precedential value with respect
to any allocations of value contained in a plan or plans under chapter 11 of the
Bankruptcy Code involving Seller.
SECTION 2.9. SALE AT CLOSING DATE . The sale, transfer, assignment
and delivery by Seller of the Purchased
15
Assets, Leased Properties and Subleased Properties to Purchaser, and the
assumption by Purchaser of the Assumed Liabilities, as herein provided shall be
effected on the Closing Date by the execution and delivery by Seller and
Purchaser of (i) a Lease Assignment and Assumption Agreement substantially in
the form of EXHIBIT C, for the Assigned Leases, pursuant to which Lease
Assignment and Assumption Agreements Purchaser shall confirm its assumption of
all liabilities and obligations under the Assigned Leases which accrue from and
after the Closing Date; (ii) a Lease with respect to each Leased Property, (iii)
a Sublease with respect to each Subleased Property being sublet to Purchaser;
(iv) a limited warranty deed for each of the Purchased Real Properties; and (v)
an Assignment and Assumption Agreement for the Other Contracts, substantially in
the form of EXHIBIT A. With respect to the other Purchased Assets and Assumed
Liabilities, Seller shall execute and deliver to Purchaser a Xxxx of Sale and
Assumption Agreement substantially in the form of EXHIBIT B.
SECTION 2.10. APPORTIONMENTS. The following amounts are to be
apportioned as of 12:00 midnight on the day preceding the Closing Date (the
"APPORTIONMENT DATE") to the extent such are valid post-petition claims or are
subject to non-avoidable Liens: under the Real Property Lease Agreements, Real
Property Purchase Agreements and Assigned Leases, (i) water, sewer and utility
charges and real estate taxes, to the extent all or any are due and payable
under the Real Property Purchase Agreements or Assigned Leases, and (ii) such
other apportionments and adjustments as are customarily apportioned in
transactions of this nature. Except as otherwise provided herein, all such
prorations shall be verified by Purchaser and shall be made on the basis of
actual bills, to the extent available, or, in the absence of such actual bills,
on good faith estimates of Seller based on the most recent bills received by
Seller.
SECTION 2.11. PURCHASE OF CERTAIN REAL PROPERTY.
A. Due Diligence.
On the Closing Date, Seller shall sell to Purchaser, and Purchaser
shall purchase from Seller, for the prices set forth on SCHEDULE I hereto, each
of the Purchased Real Properties; PROVIDED, HOWEVER, that Purchaser shall not be
required to purchase any one or more of the Purchased Real Properties if
Purchaser shall (i) determine in good faith that, as a result of diligence
conducted by or on behalf of Purchaser after the date hereof and prior to
October 2, 1998, matters relating to title to or condition of or liabilities
(including environmental liabilities) associated therewith materially and
adversely affect the benefits to be obtained by Purchaser from its acquisition
of such Purchased Real Property and (ii) notify Seller of such determination in
writing, prior to October 8, 1998, specifying the reasons therefor in reasonable
detail. If any one or more of the Purchased Real Properties is not to be
16
purchased by Purchaser as a result of the operation of the foregoing provisions,
Purchaser and Seller shall, at Closing, enter into a Lease with respect to such
property substantially in accordance with the terms set forth on SCHEDULE I
hereto.
B. Damage to or Taking of the Property.
If, prior to the Closing, (i) (x) any portion of a Purchased Real
Property is damaged by fire, vandalism, acts of God, or other casualty or cause
and (y) such damage can be repaired within 6 months, then Purchaser shall accept
the property as is together with Seller's rights, if any, to any insurance
proceeds, in which case, Seller shall cooperate with Purchaser in any loss
adjustment negotiations, legal actions and agreements with the insurance company
and Seller shall assign to Purchaser at the Closing its rights, if any, to such
insurance proceeds (and pay over to Purchaser any such proceeds already
received, but not yet expended). If there shall occur an uninsured casualty to
the property that does not otherwise result in the termination of the sale of
such Purchased Real Property pursuant to this section or if Seller's insurance
proceeds due to a casualty shall be subject to Seller's deductible under its
insurance policies, Seller may (x) elect not to sell such Purchased Real
Property to Purchaser, in which case the Purchase Price shall be reduced by the
amount allocated to such Purchased Real Property on Schedule I attached hereto,
with respect to the Purchase thereof, or (y) elect to sell such Purchased Real
Property to Purchaser at the Closing and give Purchaser a credit against the
Purchase Price in an amount equal to the cost of repairing the damage resulting
from such casualty remaining as of the Closing Date. The computation of the cost
of repair under the preceding sentence shall take into account Purchaser's
anticipated renovations to the property which may in some instances render such
repairs unnecessary. Seller will not settle any claims or legal actions relating
thereto without Purchaser's prior written consent, which consent shall not be
unreasonably withheld or delayed. If such damage cannot be repaired within 6
months, then Seller shall promptly notify Purchaser of such damage and either
Seller or Purchaser shall have 10 days after Purchaser's receipt of such
notification to elect not to purchase such Purchased Real Property. In the event
of an eminent domain taking or the issuance of a notice of an eminent domain
taking with respect to all or substantially all of a Purchased Real Property,
such Purchased Real Property shall not be transferred to Purchaser and Seller
shall be entitled to receive all eminent domain awards and shall control all
condemnation award proceedings. In the event of an eminent domain taking or the
issuance of a notice of an eminent domain taking with respect to less than all
or substantially all of one or more parcels of Purchased Real Property, this
Agreement shall remain in full force and effect, Purchaser shall be obligated to
consummate this transaction for the full Purchase Price and Purchaser shall be
entitled to receive all eminent domain awards and shall control all condemnation
award proceedings. To the
17
extent the same may be necessary and appropriate, Seller shall assign to
Purchaser at Closing, Seller's rights to such awards.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to SECTION 3.12, Seller represents and warrants to Purchaser
as follows:
SECTION 3.1. AUTHORITY OF SELLER. Seller is a corporation validly
existing and in good standing under the laws of the State of Delaware. Seller
has full corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and the execution and delivery by Seller of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Seller, and this
Agreement constitutes, and each of the Ancillary Agreements upon its execution
will constitute, the legal, valid and binding obligation of Seller enforceable
in accordance with its terms, subject to receipt of the Order and the receipt of
the consents, waivers and approvals specified on SCHEDULE 3.3. Subject to any
necessary authorization from the Bankruptcy Court, Seller has full corporate
power and authority to own its properties and to carry on its business
operations at the Purchased Locations presently being conducted by it, and upon
the entry of the Order, Seller will have all power and authority to take all
actions necessary or appropriate to close the transactions contemplated by this
Agreement.
SECTION 3.2. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Seller of this Agreement and the Ancillary Agreements do not and
will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Seller and, assuming that the consents, waivers,
authorizations, approvals, declarations, filings and registrations referred to
in SECTION 3.3 are obtained or made, do not and will not violate or result in a
material breach of or constitute (with notice or lapse of time or both) a
material default under any Assigned Contract.
SECTION 3.3. CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a true
and complete list of each material consent, waiver, authorization or approval of
any Person in connection any Assigned Contract involving the payment by Seller
of more than $30,000 in any calendar year (but not including for purposes of
such Schedule contracts or agreements, such as agreements for maintenance,
security, clerical, office supply and other services, that are typically
terminable upon short notice or that otherwise can be replaced without material
cost or difficulty) that is required for the execution and delivery of this
Agreement by Seller or the performance by Seller of its obligations hereunder.
18
SECTION 3.4. COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
3.4, to Seller's Knowledge, Seller has not received written notice of any
material violation of any law, regulation or order, and is not in default in any
material respect under any order, writ, judgment, award, injunction or decree of
any Governmental Agency, applicable to the Purchased Assets.
SECTION 3.5. PERMITS. Set forth on SCHEDULE 3.5 is a list of permits
relating to the operation of Seller's business at the Purchased Locations, which
permits have been provided or made available to Purchaser by Seller.
SECTION 3.6. OWNERSHIP OF PURCHASED ASSETS. Seller is the owner of
the Purchased Assets existing as of the date hereof. Subject to the issuance of
the Order, Seller will have, and at the Closing Buyer will receive, good and
valid title to the Purchased Assets, free and clear of any Liens.
SECTION 3.7. ASSIGNED CONTRACTS. True and complete copies (including
all modifications and amendments) of the Assigned Contracts listed on SCHEDULE
3.7 have been provided or made available by Seller to Purchaser. Other than as
set forth on SCHEDULE 3.7 or in motions filed with the Bankruptcy Court, neither
Seller nor, to Seller's Knowledge, any other party under any of the Assigned
Contracts, has commenced any action against the other or given or received any
written notice of any material default or violation under any Assigned Contract
which was not withdrawn or dismissed, except only for those defaults which will
be cured in accordance with the Order (or which need not be cured under the
Bankruptcy Code to permit the assumption and assignment of Executory Contracts).
The Assigned Leases and each of the other Assigned Contracts listed on SCHEDULE
3.7 is or will be at the Closing valid, binding and in full force and effect as
against Seller, except as otherwise set forth on SCHEDULE 3.7 or SCHEDULE B.
SECTION 3.8. LABOR RELATIONS. Except as set forth on SCHEDULE 3.8,
Seller is not party to any collective bargaining agreement covering Business
Employees. To Seller's Knowledge, no organizational effort is presently being
made or threatened in writing by or on behalf of any labor union with respect to
Business Employees.
SECTION 3.9. LITIGATION. Other than in connection with the Cases and
except as set forth on SCHEDULE 3.9, there are no actions, causes of action,
claims, suits or proceedings pending or, to Seller's Knowledge, threatened
against Seller which (i) seek to restrain or enjoin the consummation of the
transactions contemplated hereby or (ii) could reasonably be expected to have a
material adverse effect with respect to the Purchased Assets.
SECTION 3.10. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been
19
carried on by Seller without the intervention of any other Person acting on
Seller's behalf in such manner as to give rise to any valid claim by any such
Person against Purchaser for a finder's fee, brokerage commission or other
similar payment based on an arrangement with Seller.
SECTION 3.11. DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND
WARRANTIES; SCHEDULES.
(a) Except as expressly set forth in this Agreement, the Schedules
and Exhibits hereto, the Ancillary Agreements, and any certificate or instrument
delivered pursuant to the terms hereof or thereof, Seller makes no
representations or warranties with respect to its business or its operations,
assets (including, without limitation, the Purchased Assets), liabilities
(including, without limitation, the Assumed Liabilities) or conditions,
including, with respect to the Purchased Assets, any representation or warranty
of merchantability, suitability or fitness for a particular purpose, or quality
as to the Purchased Assets, or any part thereof, or as to the condition or
workmanship thereof, or the absence of any defects therein, whether latent or
patent. Except as provided in this Agreement, the Schedules and Exhibits hereto,
the Ancillary Agreements, and any other certificate or instrument delivered
pursuant to the terms hereof or thereof, the Purchased Assets are to be conveyed
hereunder "AS IS," "WHERE IS," and "WITH ALL FAULTS" on the date hereof and in
their present condition, subject to reasonable use, wear and tear between the
date hereof and the Closing Date, and Purchaser shall rely upon its own
examination thereof.
(b)...Any item disclosed on any one Schedule shall be deemed to be
disclosed on each Schedule, where relevant. Disclosure of an item on any
Schedule shall not be deemed to be an admission that such item is material. The
parties hereto (i) acknowledge that certain Schedules are subject to revision
until the earlier to occur of (x) seven (7) Business Days following the date of
this Agreement and (y) the date that the Bidding Protections Order is entered;
and (ii) shall negotiate in good faith to amend this Agreement as necessary to
incorporate such revised Schedules, to the extent that such revised Schedules do
not materially affect the Purchase Price.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrant to Seller as follows:
SECTION 4.1. AUTHORITY OF PURCHASER. Purchaser is a corporation,
validly existing, and in good standing under the laws of the state of its
incorporation. Purchaser has full corporate power and authority to execute and
deliver this Agreement, and the execution and delivery by Purchaser of this
20
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser, and this Agreement constitutes, and the Ancillary Agreements when
executed will constitute, the legal, valid and binding obligations of Purchaser
enforceable in accordance with their terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally and by legal and
equitable limitations on the enforceability of specific remedies. Purchaser has
full corporate power and authority to own its properties and to carry on the
business presently being conducted by it.
SECTION 4.2. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements do not
and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Purchaser and do not and will not violate any
provision of law, or any order, judgment or decree of any court or other
Governmental Agency applicable to Purchaser, or violate or result in a material
breach of or constitute (with notice or lapse of time or both) a material
default under any loan agreement, mortgage, security agreement, indenture or
other instrument to which Purchaser is a party or by which it is bound.
SECTION 4.3. CONSENTS AND APPROVALS. The execution, delivery and
performance by Purchaser of this Agreement do not require the consent or
approval of, or filing with, any Governmental Agency or other Person except: (i)
as may be required to effect the transfer to Purchaser of any Permits; or (ii)
such consents, approvals and filings, the failure to obtain or make which would
not, individually or in the aggregate, have a material adverse effect on its
ability to consummate the transactions contemplated hereby.
SECTION 4.4. AVAILABILITY OF FUNDS. Purchaser has and will have at
the Closing the Committed Financing, which will be sufficient to allow it to pay
the Purchase Price at the times and in the manner set forth in this Agreement
and to satisfy all its other obligations under this Agreement.
SECTION 4.5. LITIGATION. There are no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions, or decrees pending or,
to the Knowledge of Purchaser, threatened against Purchaser at law or in equity
or before or by any Governmental Agency, which seeks to restrain or enjoin the
consummation of the transactions contemplated hereby or that could otherwise
materially and adversely affect the ability of Purchaser to perform its
obligations hereunder.
SECTION 4.6. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Purchaser
without the intervention of any other
21
Person acting on its behalf in such manner as to give rise to any valid claim by
any such Person against Seller or its Affiliates for a finder's fee, brokerage
commission or other similar payment based on an arrangement with Purchaser.
SECTION 4.7. ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS.
Purchaser is and will be capable of satisfying the conditions contained in
sections 365(b)(1)(c) and (f) of the Bankruptcy Code with respect to the
Executory Contracts.
ARTICLE V.
CERTAIN COVENANTS OF SELLER
Seller covenants with Purchaser that from and after the date hereof
through the Closing Date:
SECTION 5.1. CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Unless
otherwise ordered by the Bankruptcy Court SUA SPONTE or on motion by a third
party, Seller shall not, except as required or contemplated by this Agreement,
make any material change in the Fixed Assets or enter into any transaction
respecting the Purchased Assets, other than sales of Inventory in the ordinary
course of Seller's business or other transactions in the ordinary course of
Seller's business in the Cases consistent with Seller's past practices or as
otherwise contemplated by this Agreement. Without limiting the generality of the
foregoing provisions, Seller will maintain New Inventory only in amounts and mix
generally consistent with its practices prior to the Closing Date.
SECTION 5.2. CONSENTS AND APPROVALS. Subject to SECTION 9.2 and
Seller's right to accept a higher or otherwise better offer, Seller shall use
commercially reasonable efforts to obtain (i) entry of the Order by the
Bankruptcy Court and (ii) the requisite consent or consents of the DIP Lenders
to this Agreement and the transactions contemplated hereby.
SECTION 5.3. INFORMATION AND ACCESS. Seller will permit
representatives of Purchaser to have reasonable access during normal business
hours after reasonable notice from Purchaser to Seller, and in a manner so as
not to interfere with normal operations, to all premises, properties, personnel,
accountants, books, records, contracts and documents of or pertaining to the
Purchased Assets. Purchaser and each of its representatives will treat and hold
such information as confidential. Purchaser shall indemnify, defend and hold
harmless (i) Seller, (ii) the lessors under the Assigned Leases; (iii) the
overlandlords under the Subleases; and (iv) Seller's and such landlords'
respective Affiliates from and against any and all claims, demands, causes of
action, losses, damages, liabilities, cost and expenses (including, without
limitation, attorneys' fees and disbursements) suffered or incurred by such
Persons in connection with (i) Purchaser's and/or Purchaser's
22
representatives' entry upon the Leased Properties and the Subleased Properties,
and the premises subject to the Assigned Leases or (ii) any and all other
activities undertaken by Purchaser or Purchaser's representatives with respect
to the Leased Properties, the Subleased Properties and the premises subject to
the Assigned Leases pursuant to this SECTION 5.3. The parties hereto agree and
acknowledge that the obligations of Purchaser under this Agreement are not
subject to any "due diligence" condition (except as set forth in SECTION 2.11)
and that the provisions of this SECTION 5.3 shall in no way affect the
conditions set forth in Article VIII of this Agreement, which shall be effective
in accordance with their terms.
SECTION 5.4. FURTHER ASSURANCES. Upon the request of Purchaser at
any time after the Closing Date, Seller shall, at Purchaser's expense, forthwith
execute and deliver such documents as Purchaser or its counsel may reasonably
request to effectuate the purposes of this Agreement.
SECTION 5.5. ASSIGNMENT OF CONTRACTS. Seller shall use commercially
reasonable efforts to obtain from the Bankruptcy Court an order authorizing
Seller, effective on the Closing Date, to assume, cure all defaults with respect
to and assign the Assigned Contracts to Purchaser.
SECTION 5.6. SERVICES TO BE PROVIDED BY SELLER. On the Closing Date,
Seller shall enter into the Services Agreement with Purchaser, pursuant to which
Services Agreement, among other things, Purchaser shall be granted access, for a
limited time, to use the PIMS.
SECTION 5.7. CURE OF DEFAULTS. Seller shall, on or prior to the
Closing, at its expense cure any and all defaults, with respect to the Assigned
Contracts as provided in Section 365 of the Bankruptcy Code, so that such
Assigned Contracts may be assigned to Purchaser in accordance with the
provisions of Section 365 of the Bankruptcy Code, PROVIDED THAT Seller shall not
be obligated to cure any such default that is in dispute as of the Closing Date
if an escrow or other arrangement with respect thereto shall have been
established pursuant to order of the Bankruptcy Court.
SECTION 5.8. BANKRUPTCY ACTIONS. No later than five (5) Business
Days after the date hereof, Seller will file a motion with an attached proposed
order, reasonably acceptable to Seller and Purchaser, seeking approval of the
terms of this Agreement.
SECTION 5.9. CLOSED LOCATIONS; TRANSFER OF INVENTORY FROM CLOSED
LOCATIONS.
(a) Set forth on SCHEDULE 5.9 hereto is a list of Closed Locations,
which Seller shall have closed prior to, concurrently with or as soon as
practicable after the Closing.
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(b) Inventory from the Closed Locations shall be transferred, at the
expense of Seller, to the Malvern DC, from which DC Purchaser shall purchase the
New Inventory and Dirty Core Inventory (but not the Fixed Assets, Accounts
Receivable or other assets) originating from the Closed Locations.
SECTION 5.10. VACATION AND SICK LEAVE. Seller shall indemnify and
hold Purchaser harmless on account of any claim by any of Purchaser's Employees
with respect to any amounts owed to such Employees for unused vacation and sick
leave earned as of the Closing Date.
SECTION 5.11. FORM OF LEASE AND SUBLEASE; SERVICES AGREEMENT. Seller
shall negotiate in good faith with Purchaser to complete, not later than the
date of the Bidding Protections Order hearing, (i) the form of Lease and
Sublease, which Lease and Sublease shall reflect the terms set forth on SCHEDULE
E and SCHEDULE J, respectively and (ii) the final form of Services Agreement,
including the description of, and fee for, accounting services to be provided
thereunder.
ARTICLE VI.
CERTAIN COVENANTS OF PURCHASER
SECTION 6.1. CONSENTS AND APPROVALS. Purchaser shall use
commercially reasonable efforts to assist Seller in obtaining the Order and in
obtaining Bankruptcy Court approval for assignment of the Assigned Contracts,
including providing testimony as required at any hearing before the Bankruptcy
Court.
SECTION 6.2. ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS. With
respect to each Executory Contract, Purchaser shall make commercially reasonable
efforts to provide adequate assurance as required under the Bankruptcy Code of
the future performance of such Executory Contract by Purchaser. Purchaser agrees
that it will promptly take all actions reasonably required by Seller to assist
in obtaining the Bankruptcy Court's entry of the Order, such as furnishing
affidavits, non-confidential financial information or other documents or
information for filing with the Bankruptcy Court and making Purchaser's
employees and representatives available to testify before the Bankruptcy Court,
with respect to demonstrating adequate assurance of future performance by
Purchaser under the Executory Contracts.
SECTION 6.3. PERFORMANCE UNDER ASSIGNED CONTRACTS; PURCHASED REAL
PROPERTIES. Purchaser agrees that from and after the Closing Date it shall (i)
assume all obligations and liabilities of Seller under the Assigned Contracts
which accrue from and after the Closing Date, (ii) take all actions necessary to
satisfy its obligations and liabilities under the terms and conditions of each
of the Assigned Contracts and the Real Property Lease Agreements, (iii)
indemnify and hold harmless Seller for any damages, losses and liabilities
arising out of a
24
breach of this covenant, and (iv) indemnify and hold harmless
Seller for any damages, losses and liabilities arising out of or relating to the
Purchased Real Properties that arise or accrue after the Closing Date.
SECTION 6.4. FURTHER ASSURANCES. Upon the request of Seller at any
time after the Closing Date, Purchaser shall, at Seller's expense, forthwith
execute and deliver such documents as Seller or its counsel may reasonably
request to effectuate the purposes of this Agreement.
SECTION 6.5. PURCHASER FINANCING. Purchaser shall, from the
date of this Agreement until and including the Closing Date, maintain the
availability of funds pursuant to the Committed Financing.
SECTION 6.6. COLLECTION OF ACCOUNTS RECEIVABLE. Following the
Closing Date, Purchaser shall follow its customary collection procedures for its
existing jobbers (and for existing jobbers of Purchaser's Affiliates) (which do
not include litigation or use of collection agencies) to effect collection of
the Accounts Receivable and, for a period of 180 days following the Closing
Date, Seller shall remit to Purchaser amounts owed pursuant to SECTION 2.4(C).
For purposes of this SECTION 6.6, all collections (except C.O.D. payments and
payments by customers who pay by invoice) shall be applied, for each account
obligor, first to the oldest balances of any accounts of such obligor. Any New
Inventory returned by a jobber or customer to Purchaser for payment against
Accounts Receivable (based on specified invoices) will be charged a 30% handling
and restocking fee. Purchaser shall (i) deliver to Seller, beginning at the end
of the month in which the Closing Date occurs and on a monthly basis for a
nine-month period thereafter, statements setting forth the status of payment of
the Accounts Receivable and (ii) permit employees or representatives of Seller,
for a period of one year after the Closing Date, to inspect and audit
Purchaser's books and records in order to confirm Purchaser's compliance with
SECTION 2.4(C) and this SECTION 6.6.
SECTION 6.7. [RESERVED].
SECTION 6.8. FORM OF LEASE AND SUBLEASE; SERVICES AGREEMENT.
Purchaser shall negotiate in good faith with Seller to complete, not later than
the date of the Bidding Protections Order hearing, (i) the form of Lease and
Sublease, which Lease and Sublease shall reflect the terms set forth on SCHEDULE
E and SCHEDULE J, respectively and (ii) the final form of Services Agreement,
including the description of, and fee for, accounting services to be provided
thereunder.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
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The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction (unless waived in
writing by Seller [upon consultation with, and with the consent of, the DIP
Lenders)] of each of the following conditions on or prior to the Closing Date:
SECTION 7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in this Agreement shall be true in all
material respects on and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date.
SECTION 7.2. COMPLIANCE WITH AGREEMENT. Purchaser shall have
performed and complied in all material respects (and in all respects in the case
of Article II hereof) with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date.
SECTION 7.3. CONSENTS. (i) The consent of the DIP Lenders, (ii) any
consent required in connection with the assignment of the Assigned Leases or the
Subleases and (iii) other consents listed on SCHEDULE 3.3 hereto, (except, in
the case of any Assigned Contract, to the extent that such Assigned Contract is
a "Master Contract" which relates to assets other than the Purchased Assets or
if no such consent is required as a result of the Order), shall have been
obtained and shall be in full force and effect on the Closing Date.
SECTION 7.4. PURCHASER'S CLOSING DELIVERIES AND OBLIGATIONS.
Purchaser shall have delivered all items and satisfied all obligations
pursuant to SECTION 9.1(C).
SECTION 7.5. CLOSING UNDER OTHER ASSET PURCHASE AGREEMENT. The
Closing under the Other Asset Purchase Agreement shall occur concurrently
with the Closing hereunder.
SECTION 7.6. CLOSINGS UNDER REAL PROPERTY PURCHASE AGREEMENTS.
Purchaser shall, concurrently with the closing hereunder, purchase and pay the
purchase price of the Purchased Real Properties to the extent required by
SECTION 2.11.
SECTION 7.7. ENTRY OF THE ORDER. (i) The Bankruptcy Court shall have
entered the Order and (ii) the Order, as entered by the Bankruptcy Court, shall
not be stayed and shall not modify the terms and conditions of this Agreement or
the transactions contemplated hereby in any way that materially and adversely
affects Seller.
ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the
26
satisfaction (unless waived in writing by Purchaser) of each of the following
conditions on or prior to the Closing Date:
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date.
SECTION 8.2. COMPLIANCE WITH AGREEMENT. Seller shall have performed
and complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date.
SECTION 8.3. CONSENTS. (i) The consent of the DIP Lenders (which
consent shall include an arrangement, reasonably satisfactory to Purchaser, that
will provide Seller with access to funds sufficient to allow Seller to meet its
obligations, if any, under SECTIONS 2.5(B) and 2.6(B)), (ii) any consent
required in connection with the assignment of the Assigned Leases and (iii)
other consents listed on SCHEDULE 3.3 hereto, (except, in the case of any
Assigned Contract, to the extent that such Assigned Contract is a "Master
Contract" which relates to assets other than the Purchased Assets or if no such
consent is required as a result of the Order), shall have been obtained and
shall be in full force and effect on the Closing Date.
SECTION 8.4. SELLER'S CLOSING DELIVERIES AND OBLIGATIONS.
Seller shall have delivered all items and satisfied all obligations pursuant
to SECTION 9.1(B).
SECTION 8.5. CLOSINGS UNDER REAL PROPERTY PURCHASE AGREEMENTS.
Seller shall, concurrently with the Closing hereunder, sell the Purchased Real
Property to Purchaser to the extent required by SECTION 2.11.
SECTION 8.6. ENTRY OF THE ORDER. (i) The Bankruptcy Court shall have
entered the Order and (ii) the Order, as entered by the Bankruptcy Court, shall
not be stayed or modify the terms and conditions of this Agreement or the
transactions contemplated hereby in any way that adversely affects Purchaser.
SECTION 8.7. ASSIGNMENT OF CONTRACTS. The Bankruptcy Court shall
have entered the Order, or an additional order that expressly authorizes the
assumption and assignment of the Assigned Contracts, effective on the Closing
Date. In addition, Seller shall cure all defaults under the Assigned Contracts
and pay all liabilities and obligations accrued prior to the Closing Date,
subject to SECTION 5.7.
SECTION 8.8. TERMINATION OF OTHER ASSET PURCHASE AGREEMENT.
Seller shall not have terminated the Other Asset Purchase Agreement pursuant
to Section 9.3(b) of that agreement.
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ARTICLE IX.
THE CLOSING; OTHER BIDS; TERMINATION
SECTION 9.1. THE CLOSING. (a) The Closing of the purchase and sale
of the Purchased Assets (the "CLOSING") shall be held on the "CLOSING DATE" for
the transactions under the Other Asset Purchase Agreement. The Closing shall be
held at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000. At the Closing, all of the transactions provided for in ARTICLE
II hereof shall be consummated on a substantially concurrent basis.
(a)(b) SELLER'S DELIVERIES AT CLOSING. At the Closing,
Seller shall deliver (or cause to be delivered) to Purchaser the following:
(i) a duly executed Lease Assignment and Assumption Agreement
or an Assignment and Assumption Agreement, as applicable, for each
Assigned Contract;
(ii) the duly executed Xxxx of Sale and Assumption Agreement;
(iii) the duly executed Services Agreement;
(iv) the duly executed Real Property Lease Agreements;
(v) limited warranty deeds for each of the parcels of
Purchased Real Property;
(vi) FIRPTA Affidavit;
(vii) 1099-S Certificate;
(viii) Environmental Transfer Form for each Purchased Real
Property (if required pursuant to the laws of the state in which the
property is located);
(ix) any transfer tax forms required by the laws of the
municipality and/or state in which the property is located, and
other forms and documents reasonably required by the title company;
(x) the duly executed License Agreement;
(xi) certified resolutions of the Board of Directors of Seller
approving and authorizing the transactions contemplated by this
Agreement; and
(xii) a certificate, executed by a duly authorized officer of
Seller, to the effect that all conditions to closing set forth in
SECTION 8.1 and SECTION 8.2 have been satisfied.
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(c) PURCHASER'S DELIVERIES AT CLOSING. At the Closing, Purchaser
shall deliver (or cause to be delivered) to Seller the following:
(i) payment of the Purchase Price and other amounts in
accordance with the terms and conditions set forth in SECTION
2.4(B);
(ii) a duly executed Lease Assignment and Assumption Agreement
or Assignment and Assumption Agreement, as applicable, for each
Assigned Contract;
(iii) the duly executed Xxxx of Sale;
(iv) the duly executed Services Agreement;
(v) any transfer tax forms required by the laws of the
municipality and/or state in which the property is located, and
other forms and documents reasonably required by the title company;
(vi) the duly executed Real Property Lease Agreements;
(vii) the duly executed License Agreement;
(viii) certified resolutions of the Board of Directors of
Purchaser approving and authorizing the transactions contemplated by
this Agreement; and
(ix) a certificate, executed by a duly authorized officer of
Purchaser, to the effect that all conditions to closing set forth in
SECTION 7.1 and SECTION 7.2 have been satisfied.
SECTION 9.2. OTHER BIDS; FEES.
(a) BANKRUPTCY COURT APPROVAL. Upon the execution of this Agreement,
Seller will seek Bankruptcy Court approval of (i) the definition of "Superior
Bid" set forth in SECTION 9.2(B); (ii) the overbid protections set forth in
SECTION 9.2(C); and (iii) bid incentives and protections set forth in SECTION
9.2(D), and the parties acknowledge that such provisions are subject to any
required approval of the DIP Lenders and to approval of the Bankruptcy Court and
that such provisions shall not be binding and shall have no force or effect
unless and until such Bankruptcy Court approval is obtained. Purchaser
acknowledges that auction rules to be contained in a Bidding Protections Order
shall be in the form set forth in EXHIBIT G, subject to Bankruptcy Court
approval.
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(b) OTHER BIDS. Purchaser acknowledges that Seller, through The
Blackstone Group L.P. ("BLACKSTONE") as its agent, will solicit bids ("BIDS")
from other prospective purchasers ("BIDDERS") for the sale of the Purchased
Assets (as such or in combination with other assets of Seller) and/or other
assets owned by Seller in accordance with auction procedures to be established
by Blackstone in consultation with Seller's creditor constituencies, subject to
bid incentives and protections set forth in SECTION 9.2(D) and overbid
protections set forth in SECTION 9.2(C). All Bids (other than Bids submitted by
Purchaser) will be submitted with two copies of the Seller's form of purchase
agreement (the "FORM AGREEMENT"), marked to show changes requested by the
Bidder.
Seller shall have the right to select the highest or otherwise
better Bid or Bids (the "SUPERIOR BID"), which will be determined by
considering, among other things, (i) the number, type and nature of any changes
to the Form Agreement requested by each Bidder; (ii) the extent to which such
modifications are likely to delay closing of the sale of Purchased Assets to
such Bidder and the cost to Seller of such modifications or delay; (iii) the
extent to which such Bid covers less than or more than all of the Purchased
Assets; and (iv) the total consideration to be received by Seller. Purchaser
acknowledges that Seller will strongly favor Bids for all of Seller's assets or
for such assets which Seller determines, in its sole discretion, cannot
otherwise be easily sold. Seller reserves the right to accept a Bid or Bids
which contain a purchase price which is less than the Purchase Price set forth
in this Agreement but which, in Seller's sole discretion, otherwise constitutes
a Superior Bid. Seller shall have the right to aggregate separate Bids for
different assets to determine whether one or more combinations of Bids
constitute a Superior Bid.
(c) OVERBID PROTECTION. Seller will seek Bankruptcy Court approval
of the following overbid protections: (i) a higher Bid will not be considered by
Seller unless such Bid is at least $500,000 more than the sum of (x) the
Purchase Price (including any consideration under the Services Agreement) set
forth in this Agreement and in the Other Asset Purchase Agreement as such
amounts are determined in good faith by Blackstone, (y) the Breakup Fee (as
defined in SECTION 9.2(D)) under this Agreement and the Other Asset Purchase
Agreement and (z) the Expense Reimbursement (as defined in SECTION 9.2(D)) under
this Agreement and the Other Asset Purchase Agreement; and (ii) any bids
thereafter must be at least $500,000 higher than the then existing highest or
better bid ((i) and (ii) constituting, as applicable, a "QUALIFYING BID").
The value of a Bid for purposes of this SECTION 9.2(C) shall be
determined by combining (i) the consideration to be received by Seller pursuant
to such Bid for all assets covered by such Bid and (ii) the value of the
Purchased Assets that are not covered by such Bid ("NON-COVERED ASSETS"), such
value to be
30
determined in good faith by Seller on the basis of, for Purchased
Assets that are covered by other Bids or by proposals reasonably likely to
result in a sale of such Purchased Assets, the proposed consideration payable
pursuant to such other Bid or proposal, and, for other Non-Covered Assets, the
projected value thereof in the context of the most commercially reasonable
disposition of such property.
Seller shall have the right pursuant to this SECTION 9.2(C) to
aggregate separate Bids for different assets in determining whether one or more
combinations of Bids constitute a Qualifying Bid.
(d) EXPENSE REIMBURSEMENT; BREAKUP FEE. In the event that this
Agreement is terminated by Seller in breach of this Agreement, Purchaser shall
be entitled, as its sole and exclusive remedy (except as provided in the
following paragraph or in SECTION 9.4(III)) to immediate reimbursement of its
actual reasonable and documented out-of-pocket expenses incurred in connection
with the transaction contemplated by this Agreement, including professional
fees, in an amount not to exceed, for this Agreement and the Other Asset
Purchase Agreement together, $350,000 (the "EXPENSE Reimbursement"), PROVIDED
HOWEVER that Purchaser shall not be entitled to seek its share of the Expense
Reimbursement from Seller, and Seller shall not be required to pay any portion
of the Expense Reimbursement to Purchaser, and that the allocation of the
Expense Reimbursement shall be agreed upon by Purchaser and GPI.
If Seller, after consultation with its creditor constituencies,
determines that a Qualifying Bid (or Bids) (which is not Purchaser's Bid) is the
Superior Bid and subsequently consummates an agreement with respect thereto,
Purchaser will receive a break-up fee equal to 2.5% of the Purchase Price (the
"BREAKUP FEE").
(e) OTHER ASSET PURCHASE AGREEMENT. References in SECTION 9.2(C) to
"Purchased Assets" and "Purchase Price" shall be deemed to include the Purchased
Assets and the Purchase Price provided for in the Other Asset Purchase
Agreement, as well as the Purchased Assets and Purchase Price hereunder.
SECTION 9.3. TERMINATION. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions contemplated
hereby may be terminated in any of the following ways at any time before the
Closing and in no other manner:
(a) by mutual written consent of Purchaser and Seller;
(b) by Seller, if Seller accepts a Superior Bid;
(c) by Seller if Purchaser is in breach in any material respect of
any of its representations made in this
31
Agreement, or is in violation or default in any material respect of any of
its covenants or agreements in this Agreement, if the breach, violation or
default is not cured within five (5) days after written notice by Seller;
(d) by Purchaser, if Seller is in breach in any material respect of
any of its representations made in this Agreement, or is in violation or
default in any material respect of any of its covenants or agreements in
this Agreement, if the breach, violation or default is not cured within
five (5) Business Days after written notice by Purchaser;
(e) by Purchaser, if, as a result of an order of the Bankruptcy
Court, any material change referred to in SECTION 5.1 occurs, or Seller
enters into any transaction referred to in such Section (other than those
permitted by such Section), and such change or transaction materially and
adversely affects the benefits to be obtained by Purchaser pursuant to
this Agreement; or
(f) by Seller, if at any time up to and including the Closing Date,
Purchaser does not have available Committed Financing.
Notwithstanding anything to the contrary in this Agreement, in the event that
Seller uses commercially reasonable efforts to obtain the Order and the
Bankruptcy Court refuses to enter the Order, this Agreement shall terminate
without liability or obligation of Seller to Buyer.
SECTION 9.4. EFFECTS OF TERMINATION. (a) In the event that this
Agreement is terminated pursuant to SECTION 9.3, except as provided in SECTION
9.2 or in this SECTION 9.4, all further obligations of the parties hereunder
shall terminate. If this Agreement is terminated as permitted by SECTION 9.3,
termination shall be without liability of any party (or any stockholder,
director, officer, employee, agent, consultant or representative of such party)
to the other party to this Agreement; PROVIDED, HOWEVER, that (i) if such
termination shall result under SECTION 9.3(C) from the willful failure of
Purchaser to perform a covenant of this Agreement or from a breach of its
representations contained in SECTION 4.4, Purchaser shall be liable for any and
all losses, damages and expenses incurred or suffered by Seller as a result of
such failure to perform or breach, including but not limited to losses, damages
and expenses associated with the closing of Closed Stores; (ii) if this
Agreement is terminated by Seller pursuant to SECTION 9.3(B), Seller shall pay
to Purchaser the Expense Reimbursement and the Breakup Fee pursuant to the
provisions of SECTION 9.2; (iii) if this Agreement is terminated by Purchaser
pursuant to SECTION 9.3(D), Purchaser shall be entitled, as its sole and
exclusive remedy, to the Expense Reimbursement (except to the extent that
Purchaser and GPI may agree to allocate between them any
32
liquidated damages payment made to GPI pursuant to SECTION 9.4(A)(III) of the
Other Asset Purchase Agreement) in addition to the Expense Reimbursement;
PROVIDED, HOWEVER, that if Seller accepts a Superior Bid within six months of
the date of termination of this Agreement pursuant to SECTION 9.3(D), Purchaser
shall also be entitled to the Breakup Fee if and to the extent provided for in
SECTION 9.2(D); and (iv) if this Agreement is terminated by Seller pursuant to
SECTION 9.3(F), Purchaser shall be liable for any and all losses, damages and
expenses incurred or suffered by Seller as a result of such failure to perform,
including but not limited to losses, damages and expenses associated with the
closing of Closed Stores. Payment of the Expense Reimbursement, if required
pursuant to this Section 9.4, shall be made to GPI, and it shall be the sole
responsibility of GPI to allocate the Expense Reimbursement between GPI and
Purchaser. The provisions of this SECTION 9.4 shall survive any termination
hereof pursuant to SECTION 9.3.
(a)(b) Except as specifically provided in SECTION 9.4(A), this
SECTION 9.4 shall not limit the rights of the parties hereto to seek specific
performance of any obligation hereunder of any other party.
ARTICLE X.
TAXES
The parties hereto hereby covenant and agree as follows:
SECTION 10.1. TAXES RELATED TO PURCHASE OF ASSETS. The parties
recognize and acknowledge that, because the sale, transfer, assignment and
delivery of the Purchased Assets is being made in connection with Seller's plan
of reorganization, they may be exempt under section 1146(c) of the Bankruptcy
Code and the Order from state and local transfer, recording, stamp or other
similar transfer taxes (collectively "TRANSACTION TAXES") that may be imposed by
reason of the sale, transfer, assignment and delivery of the Purchased Assets;
provided, however, that if Transaction Taxes are assessed for any reason,
Purchaser and Seller shall each pay one-half of such Transaction Taxes along
with any recording and filing fees. Purchaser and Seller agree to cooperate to
determine the amount of Transaction Taxes payable in connection with the
transactions contemplated under this Agreement. Transaction Taxes shall not
include any Taxes for which Seller is responsible under SECTION 10.2. At the
Closing, Purchaser shall remit to Seller such properly completed resale
exemption certificates and other similar certificates or instruments as are
applicable to claim available exemptions from the payment of sales, transfer,
use or other similar taxes under applicable law. Purchaser and Seller will
cooperate in preparing such forms and will execute and deliver such affidavits
and forms as are reasonably requested by the other party.
33
SECTION 10.2. PRORATION OF REAL AND PERSONAL PROPERTY TAXES. Real
and personal property taxes and assessments relating to Purchased Real
Properties, Leased Properties, Subleased Properties, properties subject to
Assigned Leases, or leases of personal property, that are assigned to Purchaser
hereunder shall be prorated between Seller and Purchaser as of the Apportionment
Date, provided, however, that Seller shall not be responsible for any increased
assessments on real and personal property resulting from the transactions
contemplated hereby. All such prorations shall be allocated so that items
relating to time periods ending prior to the Closing Date shall be allocated to
Seller and items related to time periods beginning after the Closing Date shall
be allocated to Purchaser. The amount of all such prorations shall be settled
and paid on the Closing Date unless, with respect to Seller's obligations
hereunder, otherwise ordered by the Bankruptcy Court or as otherwise required by
applicable bankruptcy law.
SECTION 10.3. COOPERATION. Purchaser and Seller agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to the Purchased Assets as is reasonably
necessary for the preparation and filing of any Tax Return, for the preparation
for and proof of facts during any tax audit, for the preparation for any tax
protest, for the prosecution or defense of any suit or other proceeding relating
to tax matters and for the answer of any governmental or regulatory inquiry
relating to tax matters.
Purchaser agrees to retain possession of all files and records
delivered to Purchaser by Seller for a period of at least three years from the
Closing Date. If Purchaser determines to destroy or discard any of such files or
records after the end of such three-year period, Purchaser will give Seller
reasonable notice thereof and will allow Seller to take possession of such files
and records at Seller's expense. In addition, from and after the Closing Date,
Purchaser agrees that it will provide access to Seller and its attorneys,
accountants and other representatives (after reasonable notice and during normal
business hours and without charge) to such files and records as Seller may
reasonably deem necessary to prepare for, file, prove, answer, prosecute or
defend any claim, suit, inquiry or other proceeding, whether related to Taxes or
otherwise.
ARTICLE XI.
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
SECTION 11.1. EMPLOYMENT. The Business Employees who are offered and
accept employment with Purchaser are referred to herein as "PURCHASER'S
EMPLOYEES". The Purchaser's Employees' employment with Purchaser shall be upon
such terms and conditions as Purchaser, in its sole discretion, shall determine,
and nothing expressed or implied by this Agreement shall confer upon any
Business Employee, or legal representative thereof, any
34
rights or remedies, including any right to employment, or for any specified
period, of any nature or kind whatsoever, under or by reason of this Agreement.
Purchaser shall be responsible for any obligations or liabilities to
Business Employees under the Worker Adjustment and Retraining Notification Act
and any similar state or local "plant closing" law ("WARN") to the extent WARN
thresholds are exceeded as a result of actions taken by Purchaser on or after
the Closing Date with respect to Business Employees. Seller shall be responsible
for any obligations or liabilities to Business Employees under WARN as a result
of actions taken by Seller prior to the Closing Date.
SECTION 11.2. EMPLOYEE WELFARE BENEFIT PLANS. Except with respect to
any claim that is covered by an Assigned Contract or otherwise constitutes an
Assumed Liability, Seller shall retain responsibility for all hospital, medical,
life insurance, disability and other welfare plan expenses and benefits, and for
all workers' compensation, unemployment compensation and other government
mandated benefits (collectively referred to herein as "WELFARE TYPE PLANS"), in
respect of claims covered by any Welfare Type Plans maintained by Seller and
which are incurred by Purchaser's Employees and their dependents prior to the
Closing Date. Purchaser shall be responsible for all claims incurred on or after
the Closing Date by Purchaser's Employees and their dependents under all Welfare
Type Plans that are maintained by Purchaser for Purchaser's employees generally
and their dependents. For purposes of this SECTION 11.2, claims shall be deemed
to have been incurred:
(a) with respect to all death or dismemberment claims, on the
actual date of death or dismemberment;
(b) with respect to all disability claims, other than for short-term
disability benefits, on the date the claimant became unable to
(i) perform his or her regular duties of employment, in the
case of an employee claimant, or
(ii) perform the normal day-to-day responsibilities that would
reasonably be expected of someone of similar age and lifestyle, in
the case of a dependent claimant;
(c) with respect to short-term disability claims, the date the
incident first occurred that gave rise to such claims;
(d) with respect to all medical, drug or dental claims, on the date
the service was received or the supply was purchased by the claimant;
PROVIDED, HOWEVER, that a medical claim relating to a claimant's
hospitalization shall be deemed to be incurred on the date the claimant
was first hospitalized; and
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(e) with respect to workers' compensation claims, on the date the
incident occurred.
SECTION 11.3. COBRA. Purchaser shall have sole responsibility for
"continuation coverage" benefits provided after the Closing Date under
Purchaser's group health plans to all Purchaser's Employees, and "qualified
beneficiaries" of Purchaser's Employees, for whom a "qualifying event" has
occurred after the Closing Date. Seller shall have sole responsibility for
"continuation coverage" benefits provided under Seller's group health plans to
all employees of Seller, and "qualified beneficiaries" of employees of Seller,
for whom a "qualifying event" has occurred on or prior to the Closing Date. The
terms "continuation coverage", "qualified beneficiaries" and "qualifying event"
shall have the meanings ascribed to them under Section 4980B of the Code and
Sections 601-608 of ERISA.
SECTION 11.4. 401(K) SAVINGS PLAN. Seller currently maintains a
401(k) savings plan (the "SELLER SAVINGS PLAN") which is in compliance in all
material respects with applicable law, including ERISA. The Seller Savings Plan
is intended to meet the requirements of Section 401(a) of the Code and has been
determined by the Internal Revenue Service to be "qualified" within the meaning
of such section of the Code. Seller does not know or have reason to know of any
act which would adversely affect the qualified status of said plan. Seller and
all agents or representatives appointed by Seller or working as a result of
appointment by Seller have fulfilled in all material respects any and all
responsibilities they have or may have under applicable law, including ERISA, in
connection with the Seller Savings Plan.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
SECTION 12.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties to this Agreement made in this Agreement, subject
to the exceptions thereto, will not be affected by any information furnished to,
or any investigation conducted by, any of them or their representatives in
connection with the subject matter of this Agreement. All representations and
warranties contained in this Agreement shall not survive the Closing.
SECTION 12.2. NOTICES. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next
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Business Day, (c) one (1) Business Day after the date when sent to the recipient
by reputable express courier service (charges prepaid) or (d) seven (7) Business
Days after the date when mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Such notices, demands and
other communications will be sent to Seller and to Purchaser at the addresses
indicated below:
If to Purchaser: BWP Distributor, Inc.
000 Xxxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Facsimile No.: 000-000-0000
With a copy Xxxxxx & Xxxxxx
(which shall not 000 Xxxxxxxxxx Xxxxxx
constitute notice) to: Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: 000-000-0000
If to Seller: APS Holding Corporation
00000 Xxxx X. Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx Xxxxx
Facsimile No. 000-000-0000
With a copy Xxxxxxx Xxxx & Xxxxxxxxx
(which shall not 000 Xxxxxxx Xxxxxx
constitute notice) to: Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx X.
Xxxxxxxx III, Esq.
Facsimile No. (000) 000-0000
or to such other address as either party hereto may, from time to time,
designate in writing delivered pursuant to the terms of this Section.
SECTION 12.3. AMENDMENTS. The terms, provisions and conditions
of this Agreement may not be changed, modified or amended in any manner
except by an instrument in writing duly executed by each of the parties
hereto.
SECTION 12.4. ASSIGNMENT. This Agreement is binding upon and inures
to the benefit of the successors and assigns of each party to this Agreement
(including any trustee appointed in respect of Seller under the Bankruptcy
Code), but no rights, obligations or liabilities under this Agreement may be
assigned by either party without the prior written consent of the other party
hereto.
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SECTION 12.5. ANNOUNCEMENTS. All press releases, notices to
customers and suppliers and other announcements prior to the Closing Date with
respect to this Agreement and the transactions contemplated by this Agreement
shall be approved by both Purchaser and Seller prior to the issuance thereof;
provided that either party may make any public disclosure that it believes in
good faith is required by law or regulation (in which case the disclosing party
shall advise the other party prior to making such disclosure and provide such
other party an opportunity to review the proposed disclosure).
SECTION 12.6. EXPENSES. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all of its own legal,
accounting, investment banking and other expenses incurred by it or on its
behalf in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated.
SECTION 12.7. ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede and are in full substitution
for any and all prior agreements and understandings between them relating to
such subject matter, PROVIDED HOWEVER, that any confidentiality agreements
between Seller and Purchaser shall remain in full force and effect. The Exhibits
and Schedules to this Agreement are hereby incorporated into and made a part
hereof and are an integral part of this Agreement.
SECTION 12.8. DESCRIPTIVE HEADINGS. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 12.9. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which together shall constitute one and the same
instrument.
SECTION 12.10. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of Delaware, without giving effect to the principles of conflicts
of laws thereof. For so long as Seller is subject to the jurisdiction of the
Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial
forum for the adjudication of any matter arising under or in connection with
this Agreement, and consent to the jurisdiction of, the Bankruptcy Court. After
Seller is no longer subject to the jurisdiction of the Bankruptcy Court, the
parties hereto irrevocably elect as the sole judicial forum for the adjudication
of any matters arising under or in connection with this Agreement, and consent
to the jurisdiction
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of, the courts of the County of New Castle, State of Delaware or of the United
States of America for the District of Delaware.
SECTION 12.11. CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against either party.
Any references to any federal, state, local or foreign statute or law will also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) an accounting term not otherwise
defined herein has the meaning assigned to it by GAAP; (c) the word "or" is not
exclusive; (d) the words "include", "includes" and "including" shall be deemed
to be followed by the words "without limitation"; (e) words in the singular
include the plural and in the plural include the singular; (f) provisions apply
to successive events and transactions; and (g) "$" means the currency of the
United States of America.
SECTION 12.12. SEVERABILITY. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement or any other such instrument. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall
be added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 12.13. CONFIDENTIALITY. Seller and Purchaser agree to keep,
and to cause each of their affiliates, directors, officers, and employees to
keep, confidential any and all confidential information of the other party that
either receives in connection herewith or in the course of performing its
obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party all original documents and copies of the confidential
information which are in its possession.
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IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
A.P.S., INC.
By: /s/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: President
BWP DISTRIBUTORS, INC.
By: /s/ XXXX XXXXXXX
Name: Xxxx Xxxxxxx
Title: President
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